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CADE and statements by public company executives as potential antitrust offenses
Results conferences, institutional presentations and various events aimed at informing the market and shareholders are essential for publicly traded companies in exercising the principle of full disclosure and to strengthen investors trust.
However, this type of event may raise questions from a competitive perspective, depending on the content of the information disclosed to the market, due to the possibility that the disclosure of data regarding the company’s current economic and financial situation and its prospects could be considered an antitrust infringement, especially if they deal with pricing perspectives and quantity supplied. Brazilian competition law prohibits conduct that, while a priori lawful , may be capable of generating anti-competitive effects.
Only in the first half of 2023, CADE initiated two investigations into the possibility of public speeches by executives, in the context of statements to investors, being interpreted as an induction or influence towards uniform commercial conduct among competitors. In both cases, the investigations were motivated by the publication of news articles containing information disclosed by executives in the context of quarterly earnings statements. According to the authority: “the disclosure of potential competitively sensitive information, especially by an economic agent with considerable market share, even through public announcements, could indicate possible induction and/or influence of uniform conduct among competitors.” [1]
As for the first process, the object of analysis by CADE’s General Superintendence (SG) were some statements made by the CEO of a company in the airline sector, about future pricing policies, market share and opening and closing routes in the air transport market. of passengers. In this case, the statements contained in the journalistic article that raised concerns from the competition authority were to the effect that the company “will not reduce prices to gain market share ”; “and “Being a (market) leader is not in my goals. We will not gain market share if it is not profitable. Margins still need to grow.”
Regarding the content of the statements, the SG highlighted that the possibility of exchanging commercially sensitive information or statements directed at competitors with the aim of generating the adoption of uniform behavior is a latent concern of the authority, and that, despite the legitimacy of disclosing information market, economic agents must observe current competition rules.
The second investigation was initiated against a company in the telecommunications sector, due to journalistic articles that mention statements made by the company’s CEO during the conference call held to disclose the company’s results for the first quarter of 2023. These articles contain reflections on the possibility of adjustments in the prices of plans offered by the company both in mobile telephony and in fixed products that use fiber, such as: “ promotes readjustment in prepaid and hopes that the market follows the trend ” and “ will increase prepaid prices and hopes to serve as an example for other telcos ”.
At other times, both the SG and the MPF have already recommended the condemnation of this type of conduct, such as in Administrative Proceeding No. 08700.005438/2021-31. In this case, the hypothetical invitation to cartelization would have occurred during a Sindalcool workshop, referring to the opening of the 2021/2022 Harvest. SG alleges that, during the event, the CEO of one of the associated companies expressed the possibility of “ ordering the offer ” and suggested holding monthly meetings between the agents.
At the same time, this investigation also points out that at the same meeting there were comments about the sale of ethanol, including recommendations on ways and times to offer it, which were not considered illicit at first, as they were carried out by external consultants based on public data, having This was considered “healthy for the proper functioning of the market” by generating more subsidies for decision-making by economic agents.
In general [2] , competitively sensitive information is specific (non-aggregated) information that directly relates to the performance of the core activities of economic agents. As an example of this information, data on: operating costs, competitive strategies, pricing, expansion plans can be cited; employee salaries, etc.
In this context, when company spokespersons disclose to the market and investors information and data related to their strategies or future trends in pricing, production volume, or entry or exit in a given market or region, for example, such statements may be interpreted by the antitrust authority as an invitation to collusion between competitors, for example.
In addition to information disclosed directly by companies, this type of concern can also occur in other contexts. A good example are public statements by representatives of trade associations at events and even within the scope of legislative processes. Information regarding future behavior of agents in a given market – even if hypothetical – may be sensitive from a competitive point of view.
It is worth noting that this type of concern is not unprecedented within the scope of CADE, but it seems to have returned to the authority’s radar more recently. Regarding the actions of foreign authorities, in the first half of 2022, the president of the FTC warned that the speeches of CEOs may be, indirectly, encouraging collusion practices by mentioning price increases caused by North American inflation in public discussions. According to this position, in the context of demonstrating financial results, executives have taken advantage of the inflationary scenario to justify price increases and exploit market power, which can be interpreted as a signal to competitors about certain types of collusion strategies.
Despite this, such concerns can be resolved with appropriate legal advice, in order to guide both the form and content of these statements. As for the first process mentioned in this news, the SG decided to archive the procedure, as it understood that the statements investigated contained generic information and general analyzes of the market and the company’s strategy, not seeing, in principle, signs of infringement of the economic order. The two other investigations are pending analysis by CADE.
It can therefore be seen that competition authorities have been devoting more attention to public statements that, despite being apparently harmless, may represent a threat to competition, as they signal or induce behavior on the part of third parties. In this sense, it is highly recommended that companies adopt the appropriate compliance measures and a strategic approach that makes it possible to balance the disclosure of relevant information to the market with the guarantee that such statements do not constitute a competitive offense.
[1] Preparatory Procedure nº 08700.001819/2023-11.
[2] Guide for Analysis of Prior Consumption of Acts of Economic Concentration. Available here
Lefosse’s Competition and Antitrust Team closely monitors the changes that impact the Brazilian Market. For further clarification on this matter, or others that may be of interest to you, contact our professionals.
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